Deriving new sources of hepatocytes is critical for further advancement of liver-directed cell therapies, bioartificial liver-assist devices and toxicology studies. The need for new sources of hepatocytes stems from the overall shortage of human hepatocytes, suboptimal condition of human cells available for experiments and potential hazards associated with employing xenogenic (murine or porcine) liver cells. An ideal source of hepatocytes should be capable of population expansion; therefore, emphasis is being placed on investigating progenitor cells or human embryonic stem cells (hESC), cells that could first be expanded and then induced to express liver-specific function. However, success in driving hESC toward hepatic lineage has been limited so far, with attempts to induce liver-specific differentiation in vitro leading to only a small percentage of stem cells expressing such liver-specific markers as albumin and 11-antitrypsin. Traditional cell culture approaches employed in stem cell differentiation studies vary biological inducers one-at-a-time, requiring large numbers of cells and considerable time investment for thorough analysis. In addition, these culture techniques are not well-suited for engineering the precise composition of the microenvironment (e.g. intercellular contacts and cell-surface interactions) required to induce the hepatic phenotype in stem cells. The goal of the present proposal is to design a microenvironment niche conducive to in vitro differentiation of stem cells toward the liver phenotype. In order to converge on the composition of liver-specific stem cell niche, we propose to develop microfabricated cell culture surfaces where the interactions of hESC with extracellular matrix (ECM) proteins, growth factors and other cells (e.g. adult hepatocytes or nonparenchymal liver cells) will be precisely defined and tested in both rational and combinatorial fashion. In addition, we will develop growth factor- containing scaffolds as a way of bridging in vitro hESC differentiation studies and stem cell transplantation experiments. Stem cell-carrying heparin hydrogel microstructures will be implanted in immunodeficient mice and survival/function of cells within these constructs will be characterized. Successful completion of this proposal will lead to better understanding of the exogenous cues required for the liver-specific differentiation of hESC, improved efficiency in driving stem cells towards the hepatic phenotype and development of novel biomimetic scaffolds for stem cell transplantation. Overall, the proposed project will enable future applications of hESCs in the development of liver-related therapies.